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Exhibit 10.4
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made as of the 23rd day of June, 1998, between Fantasma,
LLC., a Delaware limited liability company with its principal place of business
at 000 Xxxxxx Xxxxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000, ("Employer")
and Xxxxx Xxxxxx of New York, New York, ("Employee").
WITNESSETH:
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WHEREAS, Employee possesses valuable skills, experience and knowledge in
the marketing, distribution and sale of watches and clocks and has heretofore
served as President of Employer; and
WHEREAS, on this date, AAi.FosterGrant, Inc. ("AAi") is acquiring a
majority of the membership interests of Employer, including acquiring of a 13.0%
membership interest from Employee (the "Interest"); and
WHEREAS, Employer has a need for Employee's services and wishes to employ
Employee, and Employee wishes to accept employment on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the undertakings and the payments
provided under the covenants and agreements herein set forth, the parties hereto
mutually agree as follows:
1. EMPLOYMENT.
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Employer hereby agrees to employ Employee as President of Employer and/or
in such other capacity of Employer as may be mutually satisfactory to Employer
and Employee or as Employer determines is compatible with Employee's abilities,
and Employee agrees to accept such employment upon the terms and conditions
hereinafter set forth.
2. TERM.
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The term of employment pursuant to this Agreement shall begin as of the
date hereof, and shall continue for the period ending three (3) years
thereafter, unless terminated prior thereto pursuant to the terms of this
Agreement.
3. DUTIES AND AUTHORITY.
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a. During the Term, Employee shall devote his full time and best
efforts to the business of Employer and shall perform the duties of his office
of President and exercise such powers, as may from time to time be assigned to
or vested in him, faithfully, diligently and loyally, devoting thereto the whole
of his time, attention and skill to the due performance of his duties hereunder,
and shall follow the lawful directions of the Chairman of Employer.
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b. During the Term, Employee shall be a full time employee of
Employer and Employee shall not engage in any other business activity; PROVIDED,
HOWEVER, that the foregoing shall not be construed as preventing Employee from
investing Employee's assets or otherwise conducting Employee's personal affairs,
unless such investment and activity interferes with the due performance of
Employee's duties to Employer hereunder.
c. Employee shall report only to the Chairman of Employer so long as
he is the Chairman of AAi, and if not the same person, then to the Chairman of
AAi, or in the event of the Chairman's absence from the country or other
unavailability, the person designated by the Chairman to fulfill the duties of
the Chairman generally. The scope of said employment as, and the duties and
responsibilities to be performed by Employee hereunder as President of the
Employer shall consist of responsibility for overall operations of Employer.
d. Employee shall work out of Employer's location in Metropolitan
New York City.
4. DEATH, DISABILITY OR INCAPACITY DURING EMPLOYMENT.
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a. If during the Term Employee dies, Employer shall provide to the
estate of Employee the items set forth at SECTION 4.c, below.
b. If during the Term Employee becomes disabled or incapacitated to
such an extent that, in the reasonable opinion of Employer, Employee is unable
to discharge a material portion of Employee's duties as contemplated by this
Agreement or becomes permanently disabled under Employer's long term disability
insurance coverage ("Permanent Disability"), then, at the option of Employer,
Employee's employment hereunder may be terminated upon written notice to
Employee or Employee's personal representative; PROVIDED, HOWEVER, that Employer
shall pay to Employee, as and when otherwise due, the items set forth at SECTION
4.c below.
c. Upon the death or Permanent Disability of Employee, as set forth
in SECTION 4.a or SECTION 4.b, above, the Employer shall provide the following:
i. Basic Salary owing to Employee (x) upon the death of the
Employee through and including the end of the month in which
the Employee dies or (y) upon the Permanent Disability of
Employee, through and including the earlier of (1) the
expiration of the term of this Agreement or (2) the date he
receives payments under Employer's long term disability
insurance coverage;
ii. Incentive Compensation pro rated on a 12 month basis from
the start of the fiscal year through the date of death or
Permanent Disability assuming that financial performance of
Employer for the balance of the year is the same as the
twelve month period preceding his Permanent Disability
through and including the end of the month in which Employee
dies or becomes permanently disabled; and
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iii. Any benefits due under any then current benefits program in
which Employee participates.
5. TERMINATION BY EMPLOYER.
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a. In the event that Employee shall:
i. fail to devote his full time and best efforts to the
performance of his services during the term of this
Agreement; or
ii. commit an act of gross negligence, dishonesty, fraud, gross
insubordination, gross malfeasance, disloyalty, bad faith or
breach of trust in the performance of his duties and
obligations under this Agreement or otherwise against or
materially adversely affecting the reputation, business or
business relationship of Employer; or
iii. fail to observe the agreements of nondisclosure of
information and not to compete set forth in SECTION 10,
respectively, hereof; or
iv. become the subject of a Bankruptcy as defined at EXHIBIT C,
attached hereto, or be accused of (by the filing of an
accusatory instrument) or be convicted of a felony or an act
involving moral turpitude, fraud, dishonesty or theft which,
in the reasonable judgment of the Chairman of Employer,
subjects Employee or Employer to public disrespect, scandal
or ridicule so as to materially adversely affect the utility
of the services of Employee to Employer; or
v. Be accused of or commit a felony or an act which, in the
reasonable judgment of the Chairman of Employer, subjects
Employee or Employer to public disrespect, scandal or
ridicule so as to materially adversely affect the utility of
the services of Employee to Employer, provided that in such
circumstances the Employer shall have the right to suspend
the Employees employment without compensation and such
suspension shall continue for a reasonable period of time
before it shall constitute cause for termination under this
Paragraph 5, such reasonable period of time to be no less
than (a) the withdrawal of the accusation; (b) six (6)
months and (c) no more than (a) the earlier of the
expiration of this Agreement, (b) the termination of this
Agreement for other reasons as provided in this Agreement,
the conviction of Employee or (c) eighteen (18) months after
the initial suspension by Employer; or
vi. refuse to perform the duties assigned to him in good faith
in accordance with this Agreement; or
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vii. violates or fail to observe in a material respect any lawful
business instruction or lawful business policy established
by the Employer that is of a material nature with respect to
the operation of its business and affairs; or
xxxx.xxxx to, or refuse to, substantially perform his duties,
responsibilities and obligations as set forth in this
Agreement after a written demand for substantial performance
is delivered by Employer, which specifically identifies the
manner in which Employee has not substantially performed his
duties, responsibilities, and obligations, if the Employee's
failure or refusal is not cured within twenty (20) days
after such written demand;
then Employer shall be deemed to have cause to terminate Employee's employment
and may (after written notice to Employee and a reasonable time (not to exceed
twenty (20) days) to cure with respect to SECTIONS 5.a.i., 0.x.xx and 5.a.vii
only) completely terminate Employee's employment and rights to receive any
future compensation or other benefits hereunder (including but not limited to
Basic Salary under SECTION 7, Incentive Compensation under SECTION 8, benefits
under SECTION 6 and reimbursement of expenses under SECTION 9 incurred after the
date of termination) and Employer shall be relieved of any further obligations
hereunder.
b. In addition to its right to terminate employment of Employee set
forth in SECTION 5.a, above, and in SECTION 2, above, Employer may at any time
terminate its obligations to Employee hereunder if Employer does not meet 75% of
the Target EBIT as set forth in EXHIBIT A for any year; PROVIDED, HOWEVER, that,
in the event of such termination, so long as Employee is in compliance with his
obligations under the Non Competition/Proprietary Rights Agreement between
Employer, AAi and Company, dated this date, Employee shall be entitled to
receive an amount equal to the Basic Salary, as and when otherwise provided for
and payable herein, for the balance of the then unexpired Term, but Employee
shall not be entitled to Incentive Compensation under SECTION 8, benefits under
SECTION 6 or reimbursement of expenses referred to in SECTION 9 hereof incurred
after the date of termination.
c. Notwithstanding the foregoing, after termination, Employer shall
remain obligated to pay Employee Basic Salary and Incentive Compensation, both
as hereinafter defined, fully earned by Employee or accrued prior to such
termination.
6. BENEFITS.
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During the Term:
a. Employer shall provide Employee with benefits equivalent to those
offered to Division heads of AAi, as amended from time to time, which currently
includes 401(k), life insurance, health insurance and long term disability
insurance;
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b. Employee shall be entitled to participate in AAi's stock option
program;
c. $1,000,000 company paid term life insurance, payable to
Employee's designated beneficiary, provided Employee is insurable at standard
rates.
7. BASIC SALARY.
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Employer agrees to pay to Employee the following basic compensation
("Basic Salary"), less normal and customary payroll deductions for local, state
and federal income, employment, excise or similar taxes, fees and deductions,
for all services rendered to Employer at the following annual rate (payable at
Employer's normal pay periods in arrears): $250,000, which shall be increased on
each anniversary of the date of this Agreement to reflect changes in the
Consumer Price Index (CPI-U) for Metropolitan New York from June 1, 1998. Basic
Salary shall be subject to annual review and periodic increases by Employer, in
Employer's absolute discretion.
8. INCENTIVE COMPENSATION.
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During the Term, Employer shall pay to Employee (a) the incentive
compensation set forth at EXHIBIT A, attached hereto, ("Incentive Compensation")
and (b) a bonus, at the absolute discretion of Employer, of up to 50% of Basic
Salary less normal and customary payroll deductions for local, state and federal
income, employment, excise or similar taxes, fees and deductions.
9. REIMBURSEMENT OF EXPENSES.
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Employee is authorized to incur reasonable expenses in connection with
and for the promotion of the business of Employer, including expenses for meals
and lodging, entertainment, and similar items as required from time to time by
Employee's duties which are beneficial to Employer. Employer shall reimburse
Employee for all such expenses, in accordance with Employer's policies in effect
from time to time, upon the presentation of an account therefor, together with
appropriate supporting documentation.
10. SPECIAL PROVISIONS.
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In consideration for the agreements set forth in this Agreement and
AAi's purchase of the Interest, Employee agrees to the provisions set forth at
EXHIBIT B, attached hereto and incorporated herein by reference, which are an
inducement for Employer to enter into this Agreement and AAi to purchase the
Interest, and shall survive the Term along with SECTIONS 11 THROUGH 15.
11. WAIVER.
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Failure of any party hereto to insist upon strict compliance with any
of the terms, covenants and conditions hereof shall not be deemed a waiver or
relinquishment of any similar right or power hereunder at any subsequent time.
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12. NOTICES.
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Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by certified mail, return receipt
requested, or by telefacsimile, to the party to whom notice should be given at
the address set forth below:
Employer: Fantasma, LLC
000 Xxxxxx Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx
Telefacsimile: 000-000-0000
With a
copy to: Xxxxxxxx, Xxxxx & Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: Xxxxx Xxxxxxxx Xx., Esq.
Telefacsimile: 401-277-9600
Employee: Xx. Xxxxx Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx. 00X
Xxx Xxxx, Xxx Xxxx 00000
With a
copy to Xxxxx & Reade, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
Telefacsimile: 000-000-0000
13. ENTIRE AGREEMENT.
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This Agreement (including the Exhibits attached hereto) and the Member
Agreement dated this date contains the entire agreement of the parties with
respect to the subject matter hereof and supersedes and cancels all other
agreements, whether oral or written, including but not limited to any other
employment agreement or terms of employment existing on the date hereof. This
Agreement may not be amended or modified, except by an agreement in writing
signed by the Employee and an executive officer of Employer.
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14. REPRESENTATIONS OF EMPLOYEE; INDEMNITY.
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In order to induce Employer to enter into this Agreement, Employee
represents and warrants to Employer that Employee is free to enter into and
perform this Agreement and that he is not a party to any oral or written
contract, understanding, agreement or restriction which inhibits or which will
be violated by Employee's performance of the duties assigned to Employee
hereunder. In the event any action or proceeding shall be wrongfully commenced
and prosecuted against Employee by reason of Employee's entry into this
Agreement and/or the performance of Employee's duties, Employer shall indemnify
and hold Employee harmless from and against any losses or expenses incurred by
Employee, including reasonable attorneys' fees, provided Employer shall have the
sole right to designate counsel to defend Employee and sole right to approve any
settlements or other resolutions of the matter.
15. ADEQUACY OF REMEDY.
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Employee acknowledges that he remedy at law for Employee's breach of
any of the provisions herein contained relating to non-competition or
confidentiality will be inadequate and that Employer shall be entitled to
injunctive relief, in addition to any other remedies that Employer may have.
16. SUCCESSORS AND ASSIGNS.
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This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors and assigns of Employer and the heirs,
assigns, executors, administrators and legal representatives of Employee. This
Agreement may not be assigned by either party without the prior written consent
of the other; provided, however, that Employer may assign this Agreement,
without Employee's consent, to any person or entity, controlling, controlled by
or under common control with Employer, or in connection with the merger,
reorganization or consolidation of Employer or sale of all or substantially all
of its assets.
17. GOVERNING LAW.
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This Agreement shall be governed by and construed in accordance with
the laws of the State of Rhode Island, without regard to its conflict of laws
rules. Any action, suit or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement shall be brought against any
of the parties in the courts of the State of Rhode Island or, if it has or can
acquire jurisdiction, in the United States District Court for the District of
Rhode Island, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served by mail on any
party anywhere in the world, in accordance with court rules. Each party hereby
waives trial by jury in any such action, suit or proceeding.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Attest: EMPLOYER:
FANTASMA, LLC
/s/ Xxxxxx Xxxxxxx By:/s/ Xxxxx XxXxxxx
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Title: Chief Financial
Officer and Treasurer
Witness:
/s/ /s/ Xxxxx Xxxxxx
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EMPLOYEE: Xxxxx Xxxxxx
